Final answer:
The price of the 1969 Ford Mustang in 2006 dollars, taking into account inflation, would be approximately $12,256.10. This is calculated by multiplying the original price by the ratio of the price indexes in 1969 and 2006.
Step-by-step explanation:
To adjust the price of an item for inflation, you can use the price index from different years.
In this case, the student wants to know what the price of a 1969 Ford Mustang, originally priced at $2,500, would be in 2006 dollars given that the price index was 36.7 in 1969 and 180 in 2006.
We can calculate the 2006 price by using the following formula:
Price in 2006 dollars = (Price in 1969 dollars) × (2006 price index / 1969 price index)
Substitute the given values into the formula:
Price in 2006 dollars = $2,500 × (180 / 36.7)
When you calculate this, you get:
Price in 2006 dollars = $2,500 × (4.90244)
Price in 2006 dollars = $12,256.10
Therefore, the price of the Ford Mustang in 2006 dollars would be approximately $12,256.10.